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Markets Update: Asia-Pacific Markets Rally on Debt Ceiling Optimism
Today's important market events:
[EUR] ECB President Lagarde Speaks - 11:00 CEST
[GBP] BoE MPC Treasury Committee Hearings - 11:15 CEST
[USD] Initial Jobless Claims - 14:30 CEST
[USD] Philadelphia Fed Manufacturing Index (May) - 14:30 CEST
[USD] Existing Home Sales (Apr) - 16:00 CEST
Asia-Pacific stocks were higher on Wednesday, taking their cue from the momentum on Wall Street. The S&P/ASX 200 was up 0.5%, the Nikkei 225 was up 1.2%, and the Hang Seng Index was up 0.8%.
The gains in Asia were capped by soft data releases from the US. The Institute for Supply Management (ISM) manufacturing index came in at 55.4 in May, below expectations of 56.0. The Philadelphia Federal Reserve manufacturing index came in at 2.6 in May, below expectations of 17.0.
US House Speaker Kevin McCarthy said he is optimistic about the ability to work together and said a debt ceiling deal by Sunday is doable. This news helped to boost risk sentiment and support stocks.
European equity futures are indicative of a higher open, with the Euro Stoxx 50 up 0.7%.
The US dollar index (DXY) is just below 103. The euro (EUR) is up against the dollar, having bounced off its 6-week low. The Australian dollar (AUD) is under pressure, having been weighed down by disappointing jobs data. Looking ahead, key economic data releases on Wednesday include the US initial jobless claims, the Philadelphia Federal Reserve manufacturing index, and existing home sales.
The S&P/ASX 200 was up 0.5%, led by outperformance in tech and strength in the financial and commodity-related sectors. However, advances were contained after disappointing jobs data which showed a surprise contraction in Employment Change and an uptick in the Unemployment Rate.
The Nikkei 225 surged at the open amid reports of potential Japanese subsidies for chipmakers following PM Kishida’s meeting with foreign chip executives. However, the index then stalled just short of its best levels in over three decades and after weaker-than-expected trade data.
The Hang Seng Index and the Shanghai Composite Index were positive amid the broad risk appetite. However, further upside was somewhat limited by the disappointment from Tencent’s earnings which posted a 27% rise in net profit but missed against expectations, while it was also reported that Montana became the first US state to ban TikTok which will take effect from January next year.
US equity futures were uneventful and took a breather following yesterday's rally.
European equity futures are indicative of a higher open with the Euro Stoxx 50 +0.7% after the cash market closed up 0.2% yesterday.
In the foreign exchange market, the US dollar index (DXY) traded rangebound just below the 103 mark with price action quiet after the prior day’s gains which were facilitated by the upside in short-term US yields and amid some optimism regarding the debt ceiling talks.
The euro (EUR) was contained but off a six-week low after making a trough at 1.0810 yesterday.
The British pound (GBP) lacked firm direction after yesterday’s fluctuations and failed incursion into the 1.2500 territory.
The Japanese yen (JPY) held on to recent gains after the yen faced headwinds from yields and lack of haven demand.
The Australian dollar (AUD) was pressured by disappointing jobs data, while the New Zealand dollar (NZD) was kept afloat after the mostly improved Budget Balance and economic forecasts.
The People's Bank of China (PBoC) set the USD/CNY mid-point at 6.9967, compared with expectations of 6.9985 (previous 6.9748).
In the fixed income market, 10-year US Treasury futures nursed losses after having bear-flattened as stocks surged on debt ceiling optimism. Bund futures remained lacklustre following yesterday's price fluctuations and hawkish ECB rhetoric. 10-year Japanese government bond (JGB) futures were pressured after the subdued performance in global counterparts and despite the Bank of Japan’s (BoJ) presence in the market for JPY 1.6tln of JGBs on top of its daily fixed-rate operations.
In the commodities market, crude futures took a breather and slightly eased back following yesterday's risk-induced rally. Qatar Energy set July Al-Shaheen crude term price at a premium of USD 1.03/bbl above Dubai quotes, according to traders. Spot gold traded sideways beneath the USD 2,000/oz level amid a steady dollar and lack of haven demand. Copper futures held on to the prior day's spoils but with price action flat overnight despite the constructive risk tone.
There are also a number of speeches from Federal Reserve (Fed) officials, including James Bullard, Loretta Mester, and Christopher Waller. Earnings reports from BT Group, IDS, and Walmart are also due on Wednesday. The Ascension Day holiday is being observed in some parts of Europe, which could lead to limited trading.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team
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